ACS

In February this year the European Parliament adopted a written declaration on “investigating and remedying the abuse of power by large supermarkets operating in the European Union”. The written declaration has raised concerns relating to competition, unfair commercial practices, consumer protection, employment and the environment. It calls for an investigation into the impact that supermarkets are having on small businesses, suppliers, workers and consumers and in particular if they are able to abuse their buying power. It also calls on the Commission to bring in legislation that will protect consumers, workers and producers.

The Commission published its response this week saying that there is already competition legislation as well as several other EU policies to govern the conduct of supermarkets that member states must adhere to.

The Directorate General (DG) for Competition stated that its main priority is to ensure that markets work to the benefit of the customer. It stated that it will continue to monitor differing and rising food costs for retailers, consumers and suppliers. DG Competition also stated that it was not within its remit to address supermarket concentrations effects on employment and environmental concerns.

The Commission responded to the suggestion of more regulation to protect vulnerable parties stating that it will further investigate the issue of buying power in collaboration with national competition agencies. Whilst the Commission said that the abuse of buying power can be detrimental because it leads to lower profitability for suppliers and therefore may mean less investment in new produce. It did also state that to argue that supermarkets can lead to a loss of diversity is a loose argument because it may simply reflect customer’s preferences.

Finally the Commission’s Single Market Review has identified retail trade as one of the areas that warrants in-depth market monitoring. It stated that a report will be prepared for 2009 to analyse the reasons for malfunctioning of retail services seen from both customers’ and suppliers’ perspectives.